Some practitioners are comfortable with the assumption that they will continue working until the end of their life, what might be considered the 'die at your desk' model. Fair enough, but there are big problems if you arrive at this position by default.
Earlier this month I was charged with the responsibility of selling a practice on behalf of a sole practitioner who passed away suddenly.
The scene at the office was nothing short of mayhem. Clients with critical deadlines days away, staff not knowing if they have a job, customers on the phone asking after partially completed work, key business arrangements left hanging, vital passwords unavailable … and with a funeral to organise on top of it all.
It’s a terrible situation, and while we made the best of it by finding a buyer willing and able to immediately step in and securing reasonable value for the family, I can’t help but wonder how much the blow could be softened by planning ahead.
The Impact on Value
In our experience, the death of the practitioner can halve the value of the practice.
This is not opportunism on behalf of the buyer (not just opportunism, anyway). When the practitioner is not present to assist with client transition this represents a real and genuine risk to the buyer – there is a trust deficit between buyer and client, and it’s not easy to bridge when the practitioner isn’t around anymore.
A successful sale on behalf of a deceased estate is certainly possible (we’ve done it several times before), but it’s very difficult to get an outcome we’d consider optimal. The estate can expect the offered price to be materially less and the payment terms to be protracted, when compared with a normal sale.
Risk and Legacy
It’s an uncomfortable fact that senior sole-trader professionals tend to tick a lot of risk factors when it comes to sudden unplanned demise. Taken as a cohort, we tend to exhibit a dangerous combination of stress, long hours and a deepening pile of age-related health risks.
Professionally, we tend to be hyper-focused on detail – it’s a necessity to be successful in our field. But this can come at the expense of our ability or willingness to look to the horizon.
We’re not comfortable with thoughts on topics like legacy. It’s better to focus on the task at hand, right? There’s real work to do!
For most senior sole-trader professionals, it’s more than just a job. Our professional life is a key and core part of our identity.
Any thoughts around the topic of retirement beg the uncomfortable question: “if I wasn’t doing this, what would I do? Who would I be?”
It’s not a simple question to answer, but there are options. Retirement need not be an all-or-nothing proposition. It’s not the only option on the table.
Alternatives to the Empty Chair
The good news is that there are steps that you can take – and if you take them early, you both protect and enhance the value of your legacy.
Hire a Locum: Bringing in a locum practitioner is a good hedge against the risk of illness or to give you some breathing room to prepare for succession. The process of briefing a locum on your procedures and WIP is also a good dry run for bringing in a successor (and may be a transition or audition for a long-term partner?)
Consider a Partner: You can head off much of the risk by bringing in a partner. I’ve written about this elsewhere – it’s a good option for many senior practitioners who want to open up some new choices for their work/life balance.
Retire: There may be a lot of uncertainty bound up in the idea of leaving behind your professional life and entering a new phase, but there is one utter certainty – your practice will attract a better sale price as a result of a deliberate and controlled business sale when compared with a sale as part of a deceased estate.
Sell and Stay: You can structure a sale transaction in such a way that you can remain in place and continue servicing your clients, retain an income stream, realise some of your equity and hand off the lion’s share of the strategic and administrative headaches to a new incoming owner. It’s an increasingly popular “best of both worlds” solution among practitioners who don’t like the idea of abandoning their identity as a professional, but who want to get some control over their work/life balance.
Go it alone: If you love what you do, and if you want to do it for as long as you can, this is certainly a valid choice. Your chair remains yours for as long as you can fill it. But if you want to preserve your legacy you should prepare well in advance for the day when you will leave your chair empty.
Two final thoughts.
First: the handling of your legacy is a key part of your responsibility to your clients, your employees and your family.
Second: If you don’t plan ahead then you have already chosen the “die at your desk” model, by default. Put it off long enough and you’ll be leaving an empty chair and a mess for someone else to handle.
That would be a poor legacy to leave behind.